Over the first three months of 2013, Northeast Utilities (NYSE:NU) has invested $141m in its transmission facilities, Leon Olivier, Northeast Utilities executive vice president and COO, said on May 2.
Transmission earnings totaled $79.9m in 1Q13, compared with $46.3m in the same period in 2012, James Judge, Northeast Utilities executive vice president and CFO, said during the company’s 1Q13 earnings conference call, adding that the increase was due in part to adding in nearly $18m of NSTAR transmission earnings to the Northeast Utilities’ consolidated transmission results in the first quarter of this year. About $16.5m of the increase resulted from transmission earnings growth in the legacy Northeast Utilities system.
Much of the increase in transmission infrastructure occurred at the company’s Western Massachusetts Electric Company (WMECO) subsidiary, as it neared completion of the Greater Springfield Reliability Project.
The Greater Springfield Reliability Project, which represents more than half of the company’s expenditures on the New England East-West Solution (NEEWS) family of projects, reached a significant milestone in early March when a 345-kV section between Connecticut and Massachusetts was energized, Olivier said during the call.
That project is about 95% complete, with some additional substation and 115-kV line work still to go over the balance of this year.
“This project remains on schedule and has been a huge success providing grid operators with a critical new link between western Massachusetts and Connecticut and helping us continue to reduce congestion costs that are passed through to customers,” he added.
The project is expected to be completed as much as 5% below its $718m budget.
He also noted that the Connecticut Siting Council approved the Connecticut section of the Interstate Reliability Project, another NEEWS project, in January.
Northeast Utilities’ partner in the project, National Grid plc subsidiary National Grid USA, has received unanimous endorsement of the project from Rhode Island utility regulators, who have forwarded that endorsement to the state siting regulators. Siting hearings have begun in Massachusetts and the project still needs siting approvals from Rhode Island and Massachusetts, as well as environmental permits in Connecticut and Rhode Island, and the “go ahead” from the U.S. Army Corps of Engineers, he added.
“We expect to commence substation construction in late 2013 or early 2014, and line work in mid-2014,” Olivier said. “Our segment is still expected to cost $218m.”
Northeast Utilities also continues to work with ISO New England (ISO-NE) on documenting results of the need analysis to resolve numerous transmission constraints in central Connecticut.
“ISO-NE is expected to identify the preferred transmission solutions in late 2013 or early 2014, which are likely to include many 115-kV line upgrades,” he said. “These projects collectively are expected to cost around $300m and are likely to require much less siting and permitting than the single 345-kV central Connecticut reliability project we had previously discussed.”
Olivier also noted that work on NSTAR Electric’s $106m Lower SEMA project to add a 345-kV link to Cape Cod, Mass., began in September 2012 and will be completed this summer. It is about 60% complete.
Northern Pass ‘will be built’
On the Northern Pass project, Olivier said that since a new route was announced at the end of 2012, the project team has worked to finalize the details of the new proposal and to continue outreach efforts with local citizens, stakeholders and communities.
“While we had hoped to share the details of our new routing proposal by now, we have decided to continue our work on building support for the new route to ensure it is the best possible proposal for New Hampshire,” he said. “There are various options we are evaluating as part of the commitment to ensure that our new route addresses the concerns raised regarding the project’s potential to impact scenic views.”
The company should be ready to announce the route “around the July timeframe.”
The project is expected to be complete by mid-2017, and the estimated cost remains $1.2bn, including the $45m expected to be spent on the project this year, Olivier said.
“The need for … the Northern Pass project is clearer now than ever before,” he said. “Volatility in the New England energy markets this past winter underscored our region’s need for new sources of clean, low-cost power to diversify our power supply and secure our energy future. Northern Pass will bring that diversity to New Hampshire and New England in the form of 1,200 MW of clean energy from the Hydro-Quebec system.”
ISO-NE recently warned that the region came dangerously close to an emergency condition this past winter because of the challenges created by its overreliance on natural gas generation.
The line will be built, Olivier said.
“It’s different from anything we’ve done before because we’ve always had the right of eminent domain,” he said, adding, “[O]ur view of this is to get it right with the stakeholders now and that will save a lot of problems that you would have as you start the actual siting process, so it takes a little bit more time, but this line will be built.”
Northeast Utilities’ Public Service of New Hampshire and project partner, Hydro-Quebec, have long histories of success in working with communities on projects, he said.
“[A]t this point in time, it’s premature to say that we would plow on,” he said. “We think we’re very, very close on this.”
He added, “[Y]ou’re never going to get everyone to concur with you, to agree with you, there will always be someone who will oppose, but once we feel we have a broad enough consensus, we’ll move forward.”
Northeast Utilities on May 1 reported 1Q13 earnings of $228.1m, or 72 cents per share, compared with earnings of $99.3m, or 56 cents per share, in 1Q12. Results for both years reflect costs related to the April 2012 merger of Northeast Utilities and NSTAR. Those costs totaled $1.8m, or 1 cent per share, in 1Q13 and $1.1m in 1Q12. NU also said that its 1Q13 results include earnings from NSTAR, while those from 1Q12 do not.